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The 5 Best Stocks for Retirees to Buy Before 2018

Adding extra income to your nest egg can be the difference between a comfortable retirement and living the retirement of your dreams. That’s why we’ve put together a list of the five beststocks for retireesto buy today…

Now, owning stocks involves a certain level of risk. That’s especially true for retirees who don’t have decades to recover losses. But if you’re a retiree with some extra money set aside, owning stable, high-dividend-paying stocks can provide extra, valuable income in your golden years.

Money MorningChief Investment Strategist Keith Fitz-Gerald says owning dividend stocks like these can be likeearning a “second salary.”

“Dividends can work like magic when it comes to reaching your financial goals and a safe retirement,” says Fitz-Gerald.

In fact, one of theretirement stockswe’ll show you below yields more than 17% on its dividend. That means a $10,000 investment would accrue $1,700 a year from dividends alone.

And that outpaces other options for retirement income, like annuities or mutual funds…

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An annuity can guarantee a steady rate of return – around 3% for a fixed annuity – but once purchased, you can’t withdraw your money without paying extra. With a stock, you can sell shares when you need to free up the money. Plus, you’ll profit if the share price rises.

Additionally, fees from annuities and mutual funds chip away at your money, countering the added income.

Managed fund fees can run over 2%. Annuities also come with complex fees. Fidelity lists 11 different fee possibilities depending on which annuity you purchase.

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Again, nothing beats a complete retirement plan when it comes to reaching your retirement goals. That’s whyFitz-Gerald has put together an action plan to help you get there, too.

Stocks for retirees moneymorning.com/wp-content/blogs.dir/1/files/2017/12/dividend-jar-75×50.jpg 75w” sizes=”(max-width: 300px) 100vw, 300px” title=”Stocks for retirees ” />But if you’re looking to add a little extra income to your retirement with stable,high-dividend stocks, we’ve got you covered.

Not only do these stocks pay high dividends – some yield above 15% – but these are well-run, profitable companies. That’s essential for income investors, because the company needs to keep generating profits to keep paying a dividend.

Fitz-Gerald says, “a company’s ability to keep paying and increasing its dividend is just as important in the long term” as high yields are.

That’s why we’ve found five stocks with high dividends and excellent business models to keep the payouts coming…

The Best Stocks for Retirees, No. 5: Ticc Capital Corp.

Ticc CapitalCorp. (Nasdaq:TICC)is a corporation chartered under a unique tax structure that allows it to send more of its profits back to investors. Business Development Corps. (BDCs) were designed to allow average investors – not the hedge fund giants on Wall Street – to fund private startups.

And that’s the structure utilized by Ticc Capital Corp. Because Ticc is a BDC, it’s required to distribute at least 90% of its income back to its investors.

That’s how Ticc pays its investors a quarterly dividend of $0.20 a share. With a share price of $6.55, the dividend yields 12.23% on your investment. That can add up to some serious income.

The average working person between ages 56 and 61 has $163,577 in savings. According to Fitz-Gerald, “TICC’s 12.23% yield would mean a $20,000 income stream a year – which amounts to $1,667/month of taxable income.”

While we don’t recommend putting your savings into one stock, the example shows just how powerful of an income generator Ticc can be for your extra money.

And Ticc is a well-run company. It has an operating cash flow of $315.16 million and a profit margin of nearly 10%. That ensures Ticc will be able to keep paying its huge dividend and can even raise it over the coming years.

The Best Stocks for Retirees, No. 4: New Residential Investment Corp.

New Residential Investment Corp.(NYSE:NRZ) is the most unique pick on our list, since it’s a real estate investment trust (REIT). NRZ manages a portfolio of real estate holdings and mortgages, which gives its investors exposure to the real estate market.

While REITs can be used to diversify a typical stock portfolio, they also bring their investors serious income.

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NRZ has over $70 billion in assets under management, and those assets bring NRZ a quarterly income of $356.79 million. And nearly all of that income gets passed on to NRZ’s investors since it’s a REIT.

“New Residential is required by the SEC to return 90% of taxable income to shareholders annually,” says Fitz-Gerald. “That means money in your pocket, if you’re one of ’em.”

NRZ pays a dividend of $0.50 a share, and with a share price of $16.95, its dividend yields 11.8% on your investment.

The Best Stocks for Retirees, No. 3: Lockheed Martin Corp.

Lockheed MartinCorp. (NYSE:LMT) is one of the best defense contractors in the world, and it’s hugely profitable.

With a profit margin of 10.37% and total revenue of $47.2 billion annually, the company is raking in a profit of nearly $5 billion a year. And in 2017, the company announced it was increasing its yearly profit projections by 5%.

You see, LMT is an exceptionally well-managed company with billions in government contracts across the world. But it’s also plugged in to the Unstoppable Trend of war, terrorism & ugliness.

The key to making huge profits is to find “must-have” companies that fall into what Fitz-Gerald calls the six “Unstoppable Trends”: medicine, technology, demographics, scarcity & allocation, energy, and war, terrorism and ugliness (also known as “defense”). The Unstoppable Trends are backed by trillions of dollars that Washington cannot derail, the Fed cannot meddle with, and Wall Street cannot hijack.

That means LMT is always going to be in demand, no matter what else is going on in the broader market. That lets LMT pay its investors a massive $2.00 dividend per share. That’s right, the company will pay you $2 a quarter just for owning its stock.

And it’s likely you’ll be growing your money by doing that, too. LMT is up 32% over the last year, jumping from $237.39 a share to $312.67 a share today. Analysts are projecting it could hit $340 a share.

That’s a nice profit opportunity for ahigh-dividend income stock.

And we’ve saved the best for last. Our last two income stocks for retirement are our top picks, including one paying a dividend that yields over 17%…

The Best Stocks for Retirees, No. 2: Arlington Asset Investment Corp.

Arlington Asset Investment Corp.(NYSE:AI) is another BDC, but this one focuses on owning government debt.

That may sound like a dull business model, but rest assured, it’s a lucrative one. AI has nearly $5 billion in its portfolio and is massively profitable.

With a profit margin of 38.8%, AI is able to funnel more than three times the profit of any stock on this list back to its investors.

That’s how it manages a dividend yield of a whopping 17.17%, the biggest dividend on our list. And the best part is AI is likely to continue growing its dividend.

Fitz-Gerald especially likes AI because of its long-term stability, which is essential for it to keep paying such a spectacular dividend.

“This stability is exactly what you’d expect from a business gathering income through U.S. government-backed mortgages,” Fitz-Gerald said. “It may not be the most exciting field, but it sure pays the bills, as you’ll see from this company’s quarterly dividend income stream.”

In fact, AI has upped its dividend 92% since 2010.

The Best Stocks for Retirees, No. 1: ABB Ltd.

ABB Ltd.(NYSE ADR:ABB) is a Swiss company specializing in electrification, but that’s just the tip of the iceberg with this company.

Fitz-Gerald says the company is actually billing itself as a “technology leader,” and that’s important for its future.

“Not many investors realize this, but more than 55% of ABB’s sales are already from software and digitally enabled devices,” according to Fitz-Gerald.

That means ABB’s future is looking bright, but its income potential is what attracts us to it here.

ABB pays a dividend of $0.76 a share. With a share price of just $25.18, investors get access to that payout for a fraction of the cost of a stock like Johnson & Johnson (NYSE:JNJ), which pays a dividend of $0.84 per $132.77 a share.

You see, Fitz-Gerald is a believer in the maxim that “price is what you pay, but value is what you get,” and ABB delivers value.

Plus it fits all three of Fitz-Gerald’s criteria for finding value in stocks, which is essential to maintaining income.

“My goal is to find a high-quality business with a proven track record, savvy management, and plenty of profit potential,” says Fitz-Gerald. And ABB stacks up with all of them.

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3 Best Dividend Stocks for Retirees with 3%-Plus Yields

Finding reliable retirement income is harder than ever thanks to the Federal Reserve’s rock-bottom interest rates, but we have three of the best dividend stocks for retirees to help you boost your income…

The historical federal funds rate has usually stayed between 2% and 5% but we’ve been between 0.5% and 1.25% for the past nine years.

And with stocks trading at all-time highs, even decent dividend income is hard to come by.

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According to Multpl.com, the average dividend yield of the S&P 500 is currently 1.86%. Compared to the S&P’s average historical yield of 4.37%, it seems like the only people receiving meaningful dividend income are the ones who can afford tens of thousands of shares.

But that doesn’t have to be the case…

For those investors who already have a retirement plan in place and still have extra money to invest, Money Morning has a strategy to supplement your main retirement income.

Each of these dividend stocks boasts a 3% dividend yield or better.

But we want to be clear: This is not a replacement for a retirement plan. It’s simply a way to boost your income on top of what you’re already collecting. And these stocks should only be bought with the extra money you have.

And these stocks are more than income investments; they also fit Money Morning Chief Investment Strategist Keith Fitz-Gerald’s “Unstoppable Trends.” These companies operate in sectors that maintain steady demand regardless which way the market goes…

“Unstoppable Trends” Lead to Growing Dividend Income

The key to dividend income investing is finding companies that fall into one of what Fitz-Gerald calls the six “Unstoppable Trends.” These trends are backed by trillions of dollars that Washington cannot repeal, the Fed cannot meddle with, and Wall Street cannot hijack. They are:

Demographics Scarcity and allocation Medicine Energy Technology War, terrorism, and ugliness (also called “defense”)

Investing in companies that are tapped into these trends is the surest way to secure reliable dividend income

Our first dividend stock is plugged into an industry projected to grow 51% annually, to $57.6 billion by 2021: artificial intelligence (AI).

Best Dividend Stocks for Retirees No. 3: Toyota Motor Corp. (NYSE: TM)

The world’s largest automaker, Toyota Motor Corp. (NYSE: TM), sports a 3.2% dividend yield.

The company has paid a dividend since 1993 and increased its payments almost every year except for a 50% cut following the Great Recession of 2008. Currently, the company’s annual dividend payment is at an all-time high of $1.97.

Toyota’s dividend is secured by revenue from the more than 70 million vehicles sold over the past nine years, including more than 30 million in the United States.

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Fitz-Gerald likes Toyota because it’s also one of the leading innovators in the auto industry…

Its Prius became the standard against which all hybrid car technology is measured. The car became the world’s bestselling hybrid, with more than 6.1 million vehicles sold globally.

Not to be outdone by the U.S. tech giants, in November 2015, Toyota declared it would invest $1 billion through 2020 to research AI. This year, that initiative materialized in a July announcement that the company would invest $100 million into its venture capital arm seeking out companies working on driverless AI technology.

The company is likely to continue growing its dividend as it dominates in auto sales and continues reimagining the technology driving its profits.

With a dividend payout ratio of less than 35% I expect Toyota to reliably pay its generous dividend for many years to come.

Best Dividend Stocks for Retirees No. 2: ABB Ltd. (NYSE: ABB)

Switzerland-based ABB Ltd. (NYSE: ABB), specializes in power-grid construction, automation, and robotics technology.

Since bottoming out at $16 in January 2016, shares of ABB, which yield 3%, have climbed to $25.50, a 59.4% increase.

The company bounced back last year after picking up two major contracts that would bolster its power-grid infrastructure business, one of its main sources of revenue.

According to a report by PwC and Oxford Economics, infrastructure spending – like on power grids – will reach $9 trillion per year by 2025, more than double the $4 trillion spent in 2012.

But that’s not all…

Fitz-Gerald says the company is billing itself as a “technology leader” rather than an infrastructure supplier – an important distinction.

“Not many investors realize this, but more than 55% of ABB’s sales are already from software and digitally enabled devices,” he added.

As industries increasingly embrace digitalization, ABB’s software and digitally enabled products represent a major growth opportunity.

The biggest example of this is in developing economies, like in Asia. Since many firms in developing countries found the cost of automation to be prohibitively expensive, they couldn’t afford to buy ABB’s products. However, thanks to lower-cost products like YuMi – the company’s $40,000 two-arm factory robot – companies in developing markets could afford to start buying ABB’s products.

As a result, analysts are forecasting earnings per share (EPS) for 2018 to come in at $1.45, up 5.07% from a week earlier. And 17.9% higher than current-year EPS expectations of $1.23.

ABB has paid its dividend every year since 2005, and staying on the forefront of technological innovation will help the company keep paying its dividend.

And there’s a dividend stock on this list with an even higher yield…

Best Dividend Stocks for Retirees No. 1: Sanofi (NYSE: SNY)

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